Brown savaged by MPs for Revenue shambles

By George Trefgarne and Benedict Brogan

12:01AM BST 24 Jul 2003

Gordon Brown was fiercely criticised by MPs yesterday for allowing the Inland Revenue to become "a law unto itself", leaving up to 10 million people out of pocket through a series of administrative blunders.

In particular, the MPs said they were "astonished" by the Government's decision to suspend for five years the routine sending out of deficiency notices to workers who fall behind in their National Insurance Contributions.

"Multiple failings" had been detected in the organisation of the National Insurance Contributions Office, which appeared to have been "acting as a law unto itself without regard for proper accountability to senior management or ministers".

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The report said: "We are extremely concerned that such failings could pass unnoticed for so long."

Michael Fallon, the Tory MP who chaired the special sub-committee which wrote the report, added: "This is yet a further example in a growing list of communication failures between ministers and officials."

David Willetts, the Tory pensions spokesman, said: "This shocking report shows the extent of the chronic mismanagement at the Treasury. The architect of this new empire is Gordon Brown. It is he who must take ultimate responsibility and is now on borrowed time."

In the past few months alone, a million people have faced delays for new tax credit payments, worth hundreds of pounds each, the MPs concluded. And since 1998 about 10 times that number have not been told they are behind on National Insurance Contributions and could miss out on part of their state pension.

Mr Brown has distanced himself from the problems at the Inland Revenue, even though tax credits - which are welfare payments made through the tax system - are his personal flagship policy.

He has appointed Dawn Primarolo, Paymaster General, as minister in charge of the Inland Revenue with a duty of overseeing the new system, but the committee criticised her for failing to meet Sir Nicholas Montague, its chairman, for five months between November 2002 and March this year.

A spokesman for the Treasury defended the tax credit system.

"For over 90 per cent of applicants they have worked smoothly," he said. "Where there were problems these have largely been resolved." However, at the beginning of this month 220,000 applications were still outstanding.

The MPs also piled criticism on Sir Nicholas, saying the fact that he kept Miss Primarolo in the dark "raised serious questions about how the department has been led".

Mr Fallon said: "This was a total failure of leadership. I don't see how it is possible that no minister met with the man who ran the Inland Revenue for five months. No wonder things got out of control."

Even though the sub-committee is chaired by an Opposition member, seven of the 11 members are Labour. They agreed with tough criticisms of Treasury ministers and Sir Nicholas, but stopped short of calling for resignations.

Much of the direct blame for crisis over the tax credits - which has seen the helpline swamped by two million frantic callers a day - has fallen on EDS, the company chosen to run the Inland Revenue's computer systems.

The committee also raised renewed concerns about a £400 million deal to outsource the Revenue's property to a company, Mapeley, which is registered offshore for tax purposes. The MPs questioned why John Prescott, the Deputy Prime Minister, thought it necessary to interfere in the deal.